Domestic growth is improving for some companies

Demands at home during the past three months grew faster than any in the last 14 years in Britain, resulting in small manufacturer’s production increasing as well.

The CBI published numbers from its SME Trends Survey indicating 30% out of the respondents of 366 firms reported a rise in output and only 17% admitted to a decline.

Those reporting domestic growth indicated that instead of a drop, a +8% was observed. This is beyond expectations, since it has not reached these levels since the beginning of 1997. Exports showed an optimistic trend as well, but not as much as the previous period.

In order to compensate labour power against the rising demand, the firms increased their staff by 10%. This, again, has not been seen since April 1995.

Profit margins are dwindling in the face of rising costs, with many businesses assuming both costs and production will continue to increase into the next period. After all, The 9% and 6% increases in export prices and domestic prices, respectively, are insufficient to counter the 28% gigantic stride of unit costs on average.

Chair of the SME Council with the CBI, Lucy Armstrong, explained, “The best news in all of this lies in manufacturing and reveals the significance of the smaller businesses in producing both jobs and growth. Their production is constantly increasing, the domestic orders are multiplying, and these companies are racing to have enough staff on hand.”

Many believe that the government’s role should be centred on improving the field of competition by encouraging the development of higher levels of skill, but also offering bonuses to those who invest. This is a strategy many believe may catch the UK up with Germany in production.